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Growing Gap Between Bosses And Worker

Wednesday, January 3, 2018

 

MINIMUM WAGE’S TWENTIETH BIRTHDAY MARRED BY GROWING PAY GAP BETWEEN WORKERS AND COMPANY BOSSES

Minimum wage would now be a whopping £12.74 if it had kept pace with chief executive pay, GMB analysis shows.

On the eve of the twentieth anniversary of legislation to introduce the national minimum wage - an investigation by GMB, Britain’s General Union, reveals how just far the statutory pay floor has fallen below company bosses’ pay packets.

The union’s analysis shows that if the national minimum wage had kept pace with the average pay of FTSE100 CEOs, it would now be a whopping £12.74 and hour - or £26,000 a year. [1]

That would be £5.24 per hour higher than at present for those workers aged 25 or older, which represents an additional £11,835.20 per year for a worker on 40 hours per week.

The national minimum wage (NMW) is currently £7.50 an hour. The figures were calculated using High Pay Centre figures showing FTSE 100 CEO average pay is now £4.35million a year – compared to £1.23 million when the NMW came in – and increase of 354%.

Every year the High Pay Centre highlights Fat Cat Day – the day when the average FTSE 100 CEO will have already been paid the same as the average UK worker earns in a whole year.

In 2018 Fat Cat Day is Thursday 4 January.

Tim Roache, GMB General Secretary, said:

“The national minimum wage was a hugely important step for working people in this country - and its anniversary should be a cause for celebration of how far we've come.

"But this twentieth birthday risks being marred by the growing pay gap between workers and company bosses.

“As our investigation shows – the rich have pulled right ahead from the rest, to an extent that is frankly sickening.

“GMB supports a national minimum wage of at least £10 an hour – which is a modest call for the many when compared to the pay increases enjoyed by the few - a position backed by Labour’s manifesto.

“A decent wage for all would bring significant returns back into our economy as money circulates through the economy.

“Those struggling to get by on the minimum wage don’t the squirrel their pound pockets away in Panama – they spend them in local shops and on the high street which benefits the real economy."

Stefan Stern, director of the High Pay Centre, said:

"It's striking that the national minimum wage came in just as executive pay really started to spiral up and out of control.

"The pay gap has grown ever since, with terrible consequences.

"There are two ways to close this unacceptable and unjustifiable gap: one is to have more restraint at the top, and the other is to have the long overdue pay-rise that lower paid workers deserve.

"We need rapid progress at both ends of the income scale."

ENDS

Contact: GMB press office on 07358 156846 or press.office@gmb.org.uk

Notes to editors:

[1] Minimum Wage would be £12.74 if it had increase at same rate as top bosses’ earnings

GMB analysis shows that if National Minimum Wage has increased at the same rate since its introduction in 1999 as FTSE CEO pay then it would be currently worth £12.74 per hour.

That would be £5.24 per hour higher than at present for those workers aged 25 or older and £5.69 higher for those aged 21-24 and currently working on the minimum wage.

A £12.74 minimum wage would equate to £26,499 per year which represents an additional £11,835.20 per year for a worker on 40 hours per week and £10,899 more per year for those 21-24 working on the minimum wage.

Calculations

Using figures from the High Pay Centre:

FTSE 100 CEO average pay 1999 1.23 million

FTSE 100 CEO average pay 2016* 4.35 million

This represents an increase of 354%

National Minimum Wage was £3.60 per hour when introduced in 1999 for those workers aged 21 and older.

This equated to £7,488 per annum in 1999 assuming 52 paid weeks per year at 40 hours per week.

£3.60 x 354% (CEO increase rate) = £12.74

The National Minimum Wage in 2017 is currently £7.05 per hour for 21-24 year olds and £7.50 for 25 years and older.

It has only experienced a 196% increase since 1999 for those 21-24 and a 208% increase for those 25 and over.

Their wages are £14,664 and £15,600 respectively over a 40 hour week and 52 weeks per year.

If the minimum wage had increased at the same rate as FTSE 100 pay it would be worth £26,499 p.a. 12.74 x 40 x 52 = £26,499

It currently is worth £14,664 p.a. (aged 21-24) and £15,600 p.a. (aged 25+) over a 40 hour week.

The wage gap is therefore £11,835.20 p.a. and £10,899 p.a. respectively.

* The latest published data on average FTSE100 CEO average pay currently available is from FTSE 100 CEO pay ending financial year 2016 published by High Pay Society and CIPD https://www.cipd.co.uk/Images/7571-ceo-pay-in-the-ftse100-report-web_tcm18-26441.pdf

High Pay Centre assessment of FTSE CEO Pay in 1999 available from date tables https://www.biznews.com/sustainable-business/2016/08/15/boardroom-pay-why-uk-ceos-earn-the-most-money/ 

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